Family members, friends and spouses are all our resort when things are rough. But in money matters they can help or they can complicate things. Because of the personal relationships involved, our perception of how we handle money when another party — who is dear to us is involved — can get complicated.
With that in mind, it is important to think about money management strategies and how they are impacted by our personal relationships.
For example, if our best judgement typically goes out of the window when a dear friend asks for help or a spouse requests something, we may be compromising our current and future financial planning.
That is not to say that accommodating people who are in our life is too much, but it is important that while we are doing so, we should also keep an eye on the bigger picture and make sure that we are not willingly walking into a trap.
If you feel that your judgement in terms of financial planning is impacted by personal relationships, follow these steps to ensure you get back on track.
Seek unbiased advice
Get a third party involved. This could be a financial adviser or a family member who is not sided with you or the other person. The outsider perspective of this person should provide some balance into the situation. In addition, it also should help both of you reach an agreement without getting into a confrontational situation.
In many cases, people are concerned about showing any resistance to spending or investment when a significant other is involved.
If that is the case, you may be already compromising your best reasoning by giving in to whatever requests you’re getting. That is not an ideal situation, and having a third voice that balances that urge to please could be invaluable.
Obviously being unable to communicate your concerns openly when the issue is related to money is not ideal. You should learn how to deal with those matters just like any other. It takes practice to get rid of the awkwardness that come along.
In addition, it also takes an open conversation with the other person to make sure that discussing money is not taking the wrong way. In many cultures, people are more sensitive to conversations related to money than any other.
So if you feel that way, you probably need to address the issue head on, and practice ways that help both of you communicate more effectively.
One way that could help is to focus on facts. For example, if you’re telling a friend that you are not in a position to lend them money. Just keep it as simple as that. Don’t get into the details of why, how and when. If you’re not comfortable lending money because this person is unreliable, because you’re tight on disposable cash, or for whatever other reason, the decision is yours and it must be respected.
Stick with your goals
If you have long-term goals in place, try to stick with them as much as possible. Don’t just give them up on a whim. Taking out a major loan to help a family member or make substantial sacrifices to accommodate other people’s financial needs should be take very seriously.
Again, that is not to say that you should never do so, but do it only after you’ve studied all the points of impact on your life, your finances and your future plans.
Try to avoid making decisions when you’re emotionally charged as well. Someone who is sick, persistent or in some of a crisis can alter your judgement. Your decision can be influenced with how you feel for this person.
Remember, however, that many people do get in financial troubles often, and while you certainly should step in and help if you’d like, you don’t want to be empowering these people to continue their financial recklessness, and expect others to bail them out every time.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Financial planning: Giving a helping hand
- Think objectively of your help
- Seek professional advice
- Communicate openly about money
- Avoid contributing to others’ problems
- Keep your own long-term plans
— R. O.